The real (e)state

Due to the constant demand in the market from end users across all segments, the realty market is not heading southwards

Despite all the talk of a slowdown in the Indian realty arena, the country’s real estate market has not lost its charm. In fact, more and bigger residential, commercial, integrated townships projects are being launched with each passing financial quarter and institutional investors are still showing interest in the sector in a big way. Not only that, the response has been overwhelming.
To cite a few instances, JP Morgan Chase, the financial services giant has taken an entity level positioning with emerging real estate major BPTP Ltd. by acquiring about 3 per cent stake for about Rs. 250 crore. The deal values the company at Rs 8,333 crore and BPTP is further discussing opportunities of co-investment at the project level with various institutions. Similarly, Ansal API has recently launched a world-class township. The company claims to have sold 500 plots since its launch a few days ago. Recently, RPS Group came up with a group housing project, Rhythm in Sector 88, Faridabad that received almost twice the number of applicants for its first phase launch. Another big realty player, Parsvnath Developers picked up 38 per cent stake in Nano City Haryana Limited, said to be one of the biggest infrastructure projects in India. To be spread over 11,000 acres, the project is said to be valued at Rs 50,000 crore.
Says Kunal Banerji, President, Marketing, Ansal API, “We are not facing any slowdown and our projects—judged by the response to Megapolis—are selling very well. The huge demand in Tier II towns is overriding the slowdown, which is where most of our projects are located. This is the first time that plots have been sold by the company and since the demand is so huge, they were lapped up instantly. Buyers from all over the world—Middle East, Tokyo, US, UK, South Africa etc—are pouring in their bookings through the Internet and the company's offices abroad.”
Avers Pradeep Jain, Chairman, Parsvnath Developers, “There is absolutely no slump in the real estate sector. On the contrary, end user’s demand has increased in the last six months. Real estate prices are going up and it has gone up from 3 to 39 per cent in our different projects in the last few months.”
However, sections of the market do believe that the number of transactions in the real estate market has gone down drastically and there are several factors affecting the sector in the current scenario. Opines Dinesh Gupta, Chairman, Prabhatam Developers Ltd, “Yes, there is an overall slowdown in the real estate sector. The most important reason is that the market has over grown in a short span of time than what was expected. Due to this unabated growth the land rates have inflated irrationally affecting the overall real estate market. Support from financial institutions has been largely curbed. The artificial growth created over a period of time is being balanced now.” As per market reports, speculators and investors have become less aggressive in the realty market due to reduced profit margins in limited period owing to the rising construction costs, inflationary pressures and the sector getting more organised and transparent. But, because of the demand in the market from end users across all segments, the market is not heading southwards as of now.
Informs Rakesh Gupta, MD, RPS Group, “There is constant demand in the real estate market and so any quality product priced effectively would find takers. In fact, demand from actual users is more than the current supply, especially in the middle segment (up to Rs 25 lakhs). Within NCR, Faridabad is growing and all quality projects are generating a good reception. We recently had a launch of our residential project, RPS Rhythm where we sold about 900 flats within two days.”
Sums up Shashi Kant, Member of Association of Certified Realtors of India, “The realty market in the national capital is buoyant as ever, as it is a need based market. As far as the NCR is concerned, there is no slowdown in the high-end market. But speculative activities have reduced in the market owing to the several factors playing up in the economy. However, at the end it is all about making profits and safe investments and end users and investors are still finding the real estate option better than anything else on offer.”